Wednesday, October 08, 2008
Greek myths, the market, and the bottom of the box
The Nikkei dropped over 7% today, hitting 2003 lows.
So odd to see transpiring in slow motion the mess that has for so long been talked about and predicted. Ever since my interest in the markets was ignited, the more rabid bears have given the "big" breakup coming a daily urgency, as if the moment we woke up the next day, we'd see the dead walking the earth, clothed in rags, eyes vacant, searching for food, now scarce. However, day by day, the day of reckoning was pushed out in the future. It would happen after this rally, after that bubble, after this this next new thing.
It feels as if at least some of that future is here...the mess behind credit markets, investment banks, mortgages...it's pretty ugly and aside from all the jokes about broken clocks, 'they' were right. The work now is to rein oneself in from swallowing the hook, line, and sinker in one go. How awful to be your own best reversal indicator and not know it!!
My cat Boris, bless his dear departed cat 'soul', was once mewing mournfully at me. I wondered what was wrong with him as he was fat and just as fiesty as ever. I leaned over to pet him, stroking his back and tail. Then, this horrible thing happened. As he just sat there, a sickening pool of yecky greeny stuff oozed from him! He had a hidden abcess!! The pressure from my hands was enough to burst it. I took him to the vets as, after I drained it, it was enormous...you could almost see to his bone! He never, until that moment, gave a sign that he had such a terrible problem. I should better say, I never saw the signs. They were subtle, even for such a talkative cat.
You can believe I became vigilant after that, regularly checking him for signs he'd been out fighting and getting into scrapes. What's worse with what is going on now, it doesn't seem to me that people will really learn from it. If the AIG execs can go to the spa, on the company,
after they got the bailout...these guys are totally clueless! They just don't get it. They are the zombies, walking glazed eyed through a world of their own, oblivious to anything outside of them.
Two mythical Greek women come to mind: Pandora, the first woman, created by Jupiter as a gift to man, from whom we get the idea of "Pandora's box"; and Cassandra, who, given the gift of prophecy by Apollo, was cursed by Apollo after she spurned him, The curse? No one would believe her prophecies, even after coming to pass. What are we to learn from these muses?
Troy would fall, tricked by a Trojan horse, even after Cassandra foretold the event and they had heard what would happen.
The curious coda to Pandora's story is that, once the box seemed empty, she looked in to find only one thing remaning, hope.
Hope remains once our curiosity has had its fill, or in the worst case, once even cynicism has run its course. From something we can't even see, touch, feel, smell, or taste, the world must be rebuilt.
Here is Alan's update to his Dow "Alan Box"
Labels: alan box, attitude, sentiment
Monday, July 18, 2005
Effective Online Forum Usage by Steve Pavlina
Steve Pavlina, whose shares his many insights on personal development at his self-named blog, has compiled a list of chatsite pros and cons in his article
Effective Online Forum Usage.
I found my head nodding in agreement with each of his points and found particular benefit in his suggestions of how to better manage chatsite experiences, which are summarized as
- Take a Forum Fast
- Reassess Your Forum Usage Habits
- Clarify Your Expectations
- Establish Reasonable Boundaries
- Let It Go
- Replace Online Socialization with Face to Face Contact
- Be a Dabbler, Not a Fixture
- Avoid Addiction
Online forums can be a powerful productivity tool, but self-awareness and discipline are required to prevent them from becoming a pitfall of procrastination.Steve Pavlina
Labels: attitude
Monday, July 11, 2005
Maybe it *is* about the money.....
Los Angeles Times: Anatomy of Give and Take "The same reward circuitry activated by cocaine, sports cars, attractive faces and jokes is activated by money. Until now, economists have assumed that money was prized not for itself but only for what it could buy.
Moreover, the prospect of winning money activates specific brain regions in a way that the threat of losing it does not, researchers at Stanford University recently demonstrated."
Now I'm in a terrible quandry, she says. Do I trade each day with a goal of "trading better", or just go for the money aspect and the dopamine high? What to do, what to do....
Labels: attitude
Friday, July 08, 2005
MarketMonk Update
If you didn't get a chance to read the site in its entirety, it is now almost
(*) too late. The inscrutable introvert trader, MarketMonk,
whose site I blogged recently, has taken his marbles and vanished into the ether. However, you can get your fill of more views about him in
this thread at EliteTrader. It turns out he was "interviewing" partners and if the 5 July 2005 post is to be believed, found four suitable candidates. Whether he will milk them for all they're worth or bring them unimagined riches, we may never know. But there seems to be a consensus that MarketMonk is "real", albeit perhaps wacky and prone to exaggeration. hee hee. What a wonderful world it is. Just don't send money to a hotmail account, ever!
(*)PS: he can run but he can't hide
his posts from GoogleLabels: attitude
Wednesday, July 06, 2005
Taking Your Trading to the Next Level
"When your divine consciousness gives you the green light do not waiver, do not hesitate and do not turn away in fear. Take the first step to the next level with conviction, love, determination and joy. For the experience you are about to have is what conscious life is all about. Never turn back and always take each step in a positive direction. You have nothing to lose and everything to gain by pushing yourself to grow, mature and prosper. The beautiful part about trading for yourself is the tremendous trust that is required."
A friend and fellow trader sent me a link to Market Monk, who since 21 Mar 2005 has chronicled his PMTC:Present Moment Trading Campaign (
link no longer available), his personal plan to take his own trading to "the next level". 79 days later, on 20July 2005, he is taking his next step, a small group of five forming a private money hedge fund. That step itself is at a new first level, a recognition that personal evolution doesn't end, it stairsteps into new territory.
Throughout his commentary are exhortations to readers to be prepared, take personal repsonsibility, and dive whole heartedly into the present moment. Being a trader, there are also charts, links, and musings both financial and philosophical, as well as summaries of his daily trading results. His personal background is ordinary enough to suggest that anyone with goals, emotions, and tools well honed can embark on their own PMTC. This is a teacher after my own heart! One who shows the way by his own actions.
Anyone who has helped others, or been successful in their endeavors recognizes that the hand that feeds
will at some point be bit. His trading results touched a nerve among disbelieving readers whose whinging emails prompted this comment
The need for proof is becoming loud. If you need proof right now you are not going to get it. I have not finished the race. I owe you nothing. Stop asking me for favors. If you do not believe my results, then please do not ever read this blog again. Go back to your own belief system. I am not asking you to change. Stay just the way you are, that is the safe thing to do. DO NOT READ THIS BLOG ANYMORE. No more emails. Leave me alone. I am not asking you to do anything for me. Stop asking me to do something for you.
I include this to emphasize one point: the first step towards taking your trading to the next level, what ever level that may be, is to take total, complete, unqualified responsibility for yourself. Knowing every detail of someone elses bank account, business plan, or trading system will do you not one iota of good if you do not make
your own bank,
your own plan,
your own system. If you use an existing method, make it yours by taking responsibility for your use of it. Until you can do that, your goals are but daydreams, an empty living of someone elses life, not your own.
Find that person yearning within you whose expression cannot be stopped, and give it the best you have, now.
(note: I've edited the dead links out)
Labels: attitude
Saturday, April 23, 2005
Chick SENT me high
Don't panic! "Chick Sent me High is how to pronounce
Csikszentmihalyi , the author of
Flow: The Psychology of Optimal Experience, published in 1990.
How does it feel to be in 'the flow?
1. Completely involved, focused, concentrating - due to innate curiosity or as the result of training
2. Sense of ecstasy - of being outside everyday reality
3. Great inner clarity - knowing what needs to be done and how well it is going
4. Knowing the activity is doable - that the skills are adequate, and neither anxious or bored
5. Sense of serenity - no worries about self, feeling of growing beyond the boundaries of ego - afterwards feeling of transcending ego in ways not thought possible
6. Timeliness - thoroughly focused on present, don't notice time passing
7. Intrinsic motivation - whatever produces 'flow' becomes its own reward
Create vs. Destroy, Creative vs. Destructive. When contemplating the latter, flow to the former.
And since we like graphs
lecture synopsis :: Quotes from Csikszentmihalyi :: InterviewIn his article,
Finding the Zone (a Word Dcoument), Brett Steenbarger summarizes how a trader can self-check for being in "the zone":
Labels: attitude
Flow
Flow:
"When a painting was beginning to get interesting they could not tear themselves away from it; they forgot hunger, social obligations, time, and fatigue so that they could keep moving it along. But this fascination lasted only as long as a picture remained unfinished; once it stopped changing and growing, the artist usually leaned it against a wall and turned his or her attention to the next blank canvas."
Labels: attitude
Friday, April 22, 2005
Dance of the Planets
Ensign Software users can experience something few other programs can offer: artistry! The following image was created using the Ensign program ESPL, a programming language that allows users to directly query, calculate, and plot using the internal Ensign engine. Isn't it wonderful? In the next post, I'll return briefly with an illustration of "emotional waves"
Earth-Mercury orbital dance, from the July 2003 Ensign Trading Tips NewsletterLabels: attitude
Sunday, April 17, 2005
Emotional Freedom
The first I heard about EFT- Emotional Freedom Technique was from
croc's journal, who at the time was trading in woodie's cci room (
croc's current blog). His observation is worth repeating before proceeding further
EFT will help you to stay calm, but EFT will not be a shortcut on your trading path. If you have not enough experience, not enough screentime, EFT can not substitute for lack of experience.
The same thing can be said of meditation. These emotion-management tools will not make you a better trader. But they will help clear the fog so that you can evaluate your methods and performance as a trader from a position of clarity.
EFT uses accupuncture meridian stimulation along with intention-based somatic (and/or memory) focus. The
technique is straightforward and consists of first
tuning into the problem, from which a phrase is composed and repeated during the Setup. I want to stress the importance of this phase, to focus attentive care and awareness into it. Then, using only the "tag end" of the Setup phrase, one "taps" the meridian points as described in the
technique link.
I would like to make one observation that, to some extent, deviates from the EFT methodology. You will see some suggestions to focus on prior "negative memories". If one has an extremely specific and overpowering memory, perhaps this is appropriate. However if one
does have such a memory, perhaps professional help is also advised.
I do not do this as this is, in my opinion, a trip down an endless corridor of mirrors. From my experience and study of feedback, focusing on body responses associated with a complex emotional form will yield significant and important results. I believe this because from the day of our birth we begin registering reactions to the world around us, and from a very early age begin to embody our memory with emotional attachments. Who can say exactly which memory triggers which body reaction? Why search for a "possible" memory
in the past when you can feel a body reaction
in the now? I offer this in particular to those who just cannot dredge up a miserable memory for their setup. Instead say something like "Even though I put tension in my neck..." or "Even though I turn my stomach in knots..". Start with that, you know that.
Aside from the benefits it confers, "tapping" can be just the Emotional Stop and Reverse break one takes
just when an emotional form threatens to disrupt things. Walking away from your trading office, to a quiet spot for tapping might help turn focus away from emotion and bring equanimity back to business.
Labels: attitude
Tuesday, April 12, 2005
Emotional Stop and Reverse
What we've covered in these articles can be thought of as an Emotional Stop and Reverse. Sensing an emotion rising, you stop not the emotion, but your reaction to the emotion, and in the process reverse the destructive pattern.
I don't like to give advice to people. But I can share what I've found to help me and perhaps there is something there that sparks an interest in you. So, please take what I say as just that.
My own method of stop and reverse is based on mediation. Don't confuse this with religion or blissed out nirvana, it is very grounded and has highly practical results. I don't suggest going at this with a "goal oriented" attitude, but rather as something that is right and good, like bathing daily, which pleases you, your body, and those around you.
I sit quietly with my eyes and ears closed to distractions. I let my mind and body experience stillness for 30 minutes or more each day. I don't find a need to chant, wear special clothes, special cushions, or special places. Your den, bedroom, or even office will be fine, as long as you and your family know it is your private time. My focus is simply the breath going in, going out. And with that focus, I then observe what is happening within my mind and my body.
Imagine if all day long you waved your arm all over the place, never stopping for anything. This is what we do with our mind. It never stops. You will discover this in your quiet silence. Don't panic!!! You don't have ADD or other psychotic disease. Treat the quiet time as a treat for your mind. I call it defragging (laughing). Simply allow thoughts to happen, but do not follow them.
Similarly, you discover that your body is in constant motion, even as you are sitting still as a statue! Starting from the top of your scalp, allow yourself to sense what your scalp, ears, face, neck, back, chest, arms, tummy, legs, and even insides are doing. You may discover that while you are in constant motion, a constant state of change, your inner eye is still.
This doesn't happen instantly. In fact, just sitting for 30 minutes is nearly impossible for many. The best way to learn is through a reputable teacher, many of which are free or nearly so. There are
Vipassana retreats worldwide, but they do require a commitment of ten days. This is too much for 99% of the world, so, simply sitting is at least a good start. You will experience patience.
Finally, do not cover your inner eye once finished with your quiet time. This is the part where you "use" it in trading. Put attentive care and awareness in what you do, use the skills you learn in silence to observe emotions rising, and to choose to not react, letting the wave rise and fall away, clearing space for the work of trading.
Here is a thread I started on this subject you might enjoy. More than a few traders practice meditation.
A second practical method that I only recently discovered but am more than happy to share is called Emotional Freedom Technique. This is worthy of a larger piece, so will save it for the next post.
Labels: attitude
Emotions, Can't Live without Them, Can't Trade with Them
Life sparkles, crackling with experiences ranging from the sublime to the terrifying. In looking to make the best of our relationships, careers, and selves, pushing the boundaries and maintaining a balance are often at odds. What we think of as emotions can add zest but when they overpower our intentions, emotions leave a destructive path we usually chalk up to "life's tuition". The same is true for trading, which after all is simply a subset of our life, and for many of us, a substantially large part if time is a consideration.
Transforming destructive patterns to creative ones is the work of refining awareness through persistence and caring. With caring, awareness becomes wisdom. With awareness, caring turns knowledge into creative action. They go hand in hand. Changing deep patterns isn't a weekend of tricks and techniques, no more than trading is a chart with a few indicators. It also doesn't happen one day and you are through. Rather, it is an evolving, the best kind of living.
To recap, we are looking at the idea that emotions interfere with trading. For those that need to know the why of emotions, I've given a brief description of modern science's view of how emotions are created through sensory input, perception and interpretation by the brain. The intent of this article is to introduce a few ways to learn to recognize your own emotions so that the work of trading can progress unimpeded.
The concept that trading involves "controlling our emotions" is a confusing one. Many interpret that to mean suppress or repress them and become a dispassionate automaton. While a crocodile temperament might be useful in the S&P pits, human nature is a bit more complex. Emotions are a natural by-product of living. What need not happen is that they sabotage your efforts. Retraining ourselves to stop living the through the lens of the past-- the seat of emotions, and learning to live in the present moment, where responses are based on the now, is what is needed.
There are many ways and methods, but there are a few simple and practical methods that are free and involve just a bit of time otherwise spent in amusements. I will discuss them in the next two posts.
Labels: attitude
Traders are From Mars
In the last post, I said
For a trader to recognize the waves of emotion and reject them in favor of riding the market waves means transforming negative behaviors into positive attitudes and effective actions.
How do you recognize emotion? What is an emotion anyway?
Our body is a complex sensor, with our eyes, ears, mouth, skin, nose relaying simple data to the brain about what is going on around it. Synapses move the signal along to the brain, where it is logged in, significance attached, and a response created and relayed. A form of actio et reactio.
image: Limbic System
The James-Lange Model better fits recent findingsSo emotion can be thought of as a reactive wave. Examine a recent negative emotional experience during trading. Perhaps overtaken by a wave of anger, you berate yourself. Not yet spent, this emotional wave harkens a memory from your youth when you miserably lost a sporting event.
Wait. What does an memory from 20 years ago have to do with a trade you made today?
Nothing. Absolutely nothing. But the emotional "echo", created in the limbic brain long long ago, has spent years compounding itself with other similar events, and no doubt had *its* origin in a prior, unremembered event. In this example, the pain of a losing trade is made equivalent to a past pattern of loss. This form of repetitive behavior serves no creative purpose. It is a simple emotional impulse that once had a use, but rationally no longer does.
Ari Kiev in
this NYMEX presentation (Second link from top, "Psychology of Risk") says, "When you feel trading anxiety, start the stopwatch". What he means is that emotional impulses are waves with a very short time cycle. Simply timing your emotional response (be it anger, panic, euphoria, elation, or any other "emotion") will prove it is short lived.
Knowing this, it becomes useful to recognize your particular "emotional forms" earlier and earlier in their cycle. By witnessing your impulse to display anger, dejection, euphoria, etc, you see its arrival, its peak, and its passing. You become free to choose instead to
not react, clearing the way for a rational response. You begin to experience for yourself that level-headed trading has a higher probability of success.
Our intellectually focused work has literally put us "out of touch" with our feelings. Traders are from Mars! By observing how your body responds during an emotional impulsive wave event isn't touchy-feely. With focus and persistent practice, it can speed you towards your goal of being a Trader in the Zone. More in the next post.
Labels: attitude
Sunday, April 10, 2005
Waves: Ride the Market or Ride your Emotions, You Decide
Study finds day-traders with cooler heads prevail"Traders with extremely intense emotions had the worst overall trading performance, researchers found. Traders with the best performance had reactions somewhere in the middle, stronger than those reporting little emotional response, but not intensely happy when their trades did well or down in the dumps when they didn't.
'Having an intermediate range of emotion response seems to be the sweet spot,' said Lo.'
Researchers also found there isn't necessarily a trading personality marked by aggressiveness, for instance. The researchers said that suggests "different personality types may be able to perform trading functions equally well after proper instruction and practice," provided they don't get too emotional about profits or losses."
As a trader, you don't need academic proof: you have lived it daily, perhaps at times even been a victim of your own emotions. Looking inward can be just as useful as charts and technique if improving your performance is what you are after.
If you haven't delved into trading psychology, Innerworth.com, which offers an excellent free newsletter, is one place to start.
Another would be Trading in the Zone, by Mark Douglas. Douglas is himself a trader and a pioneer in this field with his 1990 classic, The Disciplined Trader, written before most business schools discovered "financial engineering".
Trading psychology has even earlier roots. Charles Mackay's Extraordinary Popular Delusions & the Madness of Crowds describes manic markets of the past, and Jesse Livermore's Reminiscences of A Stock Operator chronicles the inner life of a daytrader in the early 1900s. Finally, Candlestick charting, with its origin in 1600s rice futures and final development in Meiji Japan, exploits emotional terms for market behavior.
For a trader to recognize the waves of emotion and reject them in favor of riding the market waves means transforming negative behaviors into positive attitudes and effective actions. Forgoing charting for a bit, I'll be sharing my own thoughts on this subject over the next few posts.
An important disclaimer: my knowledge on this subject no more indicates my own success than does a spoon taste the soup it holds. However, an "A" for effort counts.
Labels: attitude
Monday, February 07, 2005
Taking a Break
I will be taking an extended break from posting my work. I am grateful to those who have enjoyed and profited from it, be it in learning or trading. My best regards to my friends. Ana Maria
Labels: attitude
Friday, December 10, 2004
December already?
I've been keeping a very low profile overall, as the quarterly entries in this journal reflect. Aside from a wonderful trip to Nova Scotia this past summer, I've spent a good part of the time working to hone my intraday trading skills. This increasingly requires greater focus on my part. Candles, trends, and signals appearing on the screen in amazing rapidity are an enormous challenge to one's emotional state. This of course is the whole premise of trading psychology, the now ex-Innerworth.com having been a wonderful starting point resource for those interested in learning more.
Brett Steenbarger's site is rich in inspiration and well worth many return visits.
If it isn't apparent, my own deeper purpose in my everyday life is to discover and refine my inner workings. The "rapid fire" decision making of intraday trading, and reaping the fruits or suffering the locusts that ensue, can stir some heavy duty primal muck, rich loam for growth if one actually uses it properly. And therein lies the challenge.
My best wishes to all my friends in this wonderfully renewing time of year.
Labels: attitude
Monday, February 18, 2002
RE McMaster's "The Reaper"
RE McMaster's
philosophy on money and investing is worth reading carefully. He gives us a stirring essay we can use to transform into actions to apply in our trading. His approach resonates with the idea of balance, actio et reactio.
One concept of note is that illness or dis-ease may be attributed to Three Ts: Trauma, Toxins, and Thought. Health is a natural state, but one that in the often corrosive "real world" must be cultivated continuously through right action. We not only shape ourselves in the present with what we do and "eat" physically and mentally, but we can also reshape ourselves, reconciling and healing traumas now "past", clearing the decks for present health. Fostering a non-toxic environment-- physical and mental-- contributes to our health bringing balance to our decisions. From that place of balance, we can pursue the more mechanical aspects of making money: systems, analysis, and risk management.
PS-- this is not a recommendation to Mr. McMaster's services. I have absolutely no affiliation with him.
Labels: attitude
